trademarks abandonment at ttab and the courts: excusable...
TRANSCRIPT
Trademarks Abandonment at TTAB and the
Courts: Excusable Nonuse, Cancellation
Petition, Impact on Global Brands
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TUESDAY, JUNE 12, 2018
Presenting a live 90-minute webinar with interactive Q&A
James Hastings, Of Counsel, Collen Intellectual Property Law, Ossining, N.Y.
Donna M.D. Thomas, Managing Principal, Astrachan Gunst Thomas, Baltimore
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TRADEMARK ABANDONMENT
Donna M.D. Thomas
Astrachan Gunst Thomas, [email protected]
410-783-3522
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AGENDA
Proving and Defending Abandonment in the Federal
Courts
1. Definition of a Trademark
2. Definition of Abandonment
3. Burden of Proof
4. Consequences of Abandonment
5. Abandonment by Discontinued Use with Intent Not to Resume Use
6. Abandonment by Acts or Omissions of the Trademark Owner
A. Naked Licensing
B. Genericide
C. Other
7. Recommendations/Practice Tips
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1. Definition of a Trademark/Service Mark
• Any word, name, symbol or device, or combination thereof, used by a
person to identify and distinguish its goods and services from those of
others and to indicate the source of the goods or services. 15 U.S.C. §
1127
• A trademark signifies that all goods/services bearing the mark come
from or are controlled by a single source and are of a consistent and
predictable level of quality.
• Trademark rights are gained through actual usage of a mark with
goods or services – not by conception or creation of a mark
• “There is no such thing as property in a trademark except as a right
appurtenant to an established business or trade in connection with
which the mark is employed.” United Drug v. Theodore Rectanus, 248 U.S.
90, 97-98 (1918)
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2. Definition of Abandonment
“A mark shall be deemed to be ‘abandoned’ if either of the following
occurs:
(1) When its use has been discontinued with intent not to resume
such use. Intent not to resume may be inferred from circumstances.
Nonuse for 3 consecutive years shall be prima facie evidence of
abandonment. ‘Use’ of a mark means the bona fide use of such mark
made in the ordinary course of trade, and not made merely to reserve a
right in a mark.
(2) When any course of conduct of the owner, including acts of
omission as well as commission, causes the mark to become the generic
name for the goods or services on or in connection with which it is used
or otherwise to lose its significance as a mark. Purchaser motivation shall
not be a test for determining abandonment under this paragraph.”
(15 U.S.C. § 1127)
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Contexts in Which Abandonment is Asserted
Abandonment is typically asserted:
1. As a defense to a claim of infringement brought against a use of a
mark occurring after the abandonment of the mark by the prior user.
The abandonment defense applies to infringement of common law
(i.e. unregistered) marks and federally registered marks.
(15 U.S.C. § 1115(b)(2)
2. To establish ownership/priority rights in a trademark over another.
3. As a basis to cancel another’s federal trademark registration.
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3. Burden of Proof
• Party asserting abandonment bears the burden to establish
abandonment by either: clear and convincing evidence or a
preponderance of the evidence, depending on jurisdiction. Clear and
convincing evidence (often described as a strict, heavy burden of
proof) is the majority view and preponderance of the evidence is the
minority view according to McCarthy on Trademarks.
Cumulus Media, Inc. v. Clear Channel Communications, Inc., 304 F.3d 1167,
1175-1176 (11th Cir. 2002); Emergency One, Inc. v. American FireEagle, Ltd.,
228 F.3d 531, 536 (4th Cir. 2000); U.S. Jaycees v. Philadelphia Jaycees, 639 F.2d
134, 139 (3d Cir. 1981); J. Thomas McCarthy, McCarthy on Trademarks
and Unfair Competition § 17:12 (4th ed 2016)
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Burden of Proof
Party claiming abandonment must show:
non-use of mark by owner
AND
intent not to resume use of mark
“Use” = bona fide use of mark in the ordinary course of trade, and not
made merely to reserve a right in a mark.
(15 U.S.C. § 1127)
• Intent not to resume use can be inferred from prolonged period of
non-use and inference becomes stronger as duration of non-use
becomes longer.
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Burden of Proof
• Non-use for 3 consecutive years constitutes prima facie evidence of
abandonment – it establishes a mandatory inference (a rebuttable
presumption) of intent not to resume use and shifts to the trademark
owner the burden of producing evidence of either actual use during
the relevant period or intent to resume use (also described by courts as
requiring evidence excusing non-use and intent to resume use).
• Whether trademark owner has produced evidence sufficient to meet
burden of production to rebut presumption of abandonment is
question for the court, not the jury.
• BUT – ultimate burden of proof of establishing abandonment
remains on challenger.
Emergency One, Inc. v. American FireEagle, Ltd., 228 F.3d 531, 535-36 (4th Cir. 2000); Cerveceria
Centroamericana, S.A. v. Cerveceria India, Inc., 892 F.2d 1021, 1026 (Fed. Cir. 1989); Cumulus
Media, Inc. v. Clear Channel Communications, Inc., 304 F.3d 1167, 1175-76 (11th Cir. 2002); ITC
Ltd. v. Punchgini, Inc., 482 F.3d 135, 148 (2d Cir. 2007)
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Burden of Proof
• Intent to resume use generally requires “actual and concrete plans” to
resume use within “a reasonable time” or within “the reasonably
foreseeable future”
• What constitutes the “reasonably foreseeable future” varies depending
on the industry or market in which the mark is used and the particular
circumstances of the trademark owner
Emergency One, Inc. v. American FireEagle, Ltd., 228 F.3d 531, 537-38 (4th Cir.
2000); Silverman v. CBS, Inc., 870 F.2d 40 (2d. Cir. 1989)
• Trademark abandonment is an intensely factual issue
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Is the Standard for Abandonment of Unregistered, Common Law
Marks the Same as for Federally Registered Marks?
• Modern decisions typically apply Lanham Act standard of proof of
cessation of use with intent not to resume use, and may apply the
Lanham Act statutory presumption, to non-federal cases concerning
abandonment of common law marks. See Restatement Third, Unfair
Competition § 30(2) and cmt. b (1995) and J. Thomas McCarthy,
McCarthy on Trademarks and Unfair Competition § 17:11 (4th ed.
2016)
• But standard not consistent and some courts apply prior common law
standard of proving non-use and intention to abandon mark
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4. Consequences of Abandonment
• Forfeiture of trademark rights – mark falls into the public domain and
may be appropriated again by any other person in accordance with the
rules of trademark priority, with the exception of generic marks, which
remain in the public domain for all to use.
• If abandoned mark is registered, registration may be cancelled.
• But:
- Trademark rights can be abandoned only in a limited geographic territory
without losing rights elsewhere if the trademark holder ceases use or otherwise
abandons the mark only in certain geographic areas and continues use in other
geographic areas. J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition, § 17:22 (4th ed 2016); Restatement Third, Unfair Competition § 30,
cmt. a (1995)
- Trademark rights can be abandoned with respect to certain goods or services
and not others where a mark holder ceases use of its mark with select goods or
services but continues use with other goods or services.
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5. Abandonment by Discontinued Use with Intent Not
to Resume Use
Emergency One, Inc. v. American FireEagle, Ltd., 228
F.3d 531 (4th Cir. 2000)
Summary Facts:
• Plaintiff Emergency One (“EO”), a fire truck manufacturer, acquired competitor
American Eagle (“AE”) in 1989 and continued to manufacture American Eagle fire
trucks from 1989 – 6/92 to satisfy existing orders
• 1992 – Closed plan where AE fire trucks made and ceased manufacturing new fire
trucks under AE mark
• 1993 – 1994 – EO provides warranty and repair services on AE fire trucks and
refurbishes/re-builds AE fire trucks, but only one bears AE mark and remainder bear
EO mark
• All post-acquisition invoices bear EO mark
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Emergency One, Inc. v. American FireEagle, Ltd., 228
F.3d 531 (4th Cir. 2000)
Summary Facts (continued):
• EO continues to promote AE mark by selling t-shirts, hats, tote bags and name plates
bearing AE mark in gift store at factory and distributes such merchandise at trade shows
and security guards wear AE badges on uniforms
• 1994 – former AE employee establishes competitive company and begins using
American FireEagle (“AFE”) with similar logo in connection with pre-manufacturing
marketing of fire trucks, causing consumer confusion as to association between AFE
and EO
• EO sends AFE cease and desist letter and AFE claims EO abandoned AE mark
• 9/95 – EO announces it will begin selling limited option fire trucks under AE brand
• 1996 – EO sues AFE for trademark infringement and AFE defends on basis of
abandonment and counterclaims that it has acquired rights in the mark
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Emergency One, Inc. v. American FireEagle, Ltd., 228
F.3d 531 (4th Cir. 2000)
Trial Court Decision
• Jury found in favor of EO and District Court enjoined AFE’s further use of AFE
• District Court found EO rebutted presumption of abandonment based on evidence that
it continued use of mark on clothing, promotional merchandise and uniforms and in
connection with the repair and refurbishment of AE fire trucks
Appellate Court Decision
• U.S. Court of Appeals for the Fourth Circuit (“Fourth Circuit”) vacated injunction and
remanded for a new trial based on improper jury instructions concerning the nature of
use of a mark to avoid abandonment and the fact that intent to resume use requires
plans to resume use within the reasonably foreseeable future
• Fourth Circuit found AFE proved EO discontinued use of AE mark for 3 years, thereby
establishing prima facie evidence of abandonment, and that EO failed to rebut such
presumption with evidence of use, but produced sufficient evidence of intent to resume
use in the reasonably foreseeable future to rebut the presumption, thereby obligating
AFE to prove discontinued use and intent not to resume use
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Emergency One, Inc. v. American FireEagle, Ltd., 228
F.3d 531 (4th Cir. 2000)
Appellate Court Decision
Trademark Use Required to Avoid Abandonment
• “Use” of a mark means “the bona fide use of such mark made in the ordinary course of
trade, and not made merely to reserve a right in a mark” (15 U.S.C. § 1127)
• To be “used” on goods, a mark must be “placed in any manner on the goods or their
containers or the displays associated therewith or on tags or labels affixed thereto, or if
the nature of the goods makes such placement impracticable, then on documents
associated with the goods or their sale” (15 U.S.C. § 1127)
• “[N]either promotional use of the mark on goods in a different course of trade nor mere
token use constitute “use” under the Lanham Act.” Emergency One, Inc. v. American
FireEagle, Ltd., 228 F.3d 531, 536 (4th Cir. 2000)
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Emergency One, Inc. v. American Fire Eagle, 228 F.3d
531 (4th Cir. 2000)
Appellate Court Decision
EO Failed to Make Statutory Use of the Mark
• EO discontinued use of AE mark in mid-1992 when it ceased production of new AE
fire trucks
• EO’s use of AE on products other than fire trucks did not satisfy the statutory use
requirement
• Use with repair and refurbishment services could be sufficient use to prevent
abandonment, but only if mark used on the repaired goods or associated documents, and
here all invoices bore the EO mark and only 1 refurbished truck in 3 years bore the AE
mark, which was found to be a token use
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Emergency One, Inc. v. American FireEagle, Ltd., 228
F.3d 531 (4th Cir. 2000)
Appellate Court Decision
EO Demonstrated Intent to Resume Use
• Abandonment claim cannot be defeated by asserting a vague, subjective intent to resume
use of a mark at some unspecified future date. Emergency One, 228 F.3d at 537; Silverman v.
CBS, Inc., 870 F2d at 46-47 (2d Cir. 1989)
• EO produced sufficient evidence of intent to resume use based on continuous
promotion of AE mark on promotional merchandise and business plan that AE was 1
of 4 possible marks considered by EO for a new line of fire trucks between 1992- 1995
• Created triable issue of fact for jury as to whether EO had intent to resume use of AE
within reasonably foreseeable future
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Emergency One, Inc. v. American FireEagle, Ltd., 228
F.3d 531 (4th Cir. 2000)
Appellate Court Decision
What Constitutes the Reasonably Foreseeable Future?
• Depends on nature of industry or market in which mark used and particular
circumstances of trademark owner
• Because fire trucks have long lives (20-30 years), mark stays visible and goodwill value of
mark persists long after production has ceased, may be reasonable for fire truck
manufacturer to spend 5-6 years considering re-introduction of brand, whereas that
amount of time may be unreasonable for more ephemeral/short lived product like
potato chips
• EO claimed it needed time to develop new product line that did not duplicate its existing
line and it paid significant sum for AE mark only a few years earlier
• Jury could conclude that EO had no plans to use AE mark until AFE appeared or could
conclude that EO intended to resume use within reasonably foreseeable future when it
had the right product
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Emergency One, Inc. v. American FireEagle, Ltd., 228
F.3d 531 (4th Cir. 2000)
Appellate Court Decision
Effect of Public Announcement of Cessation of Use of Mark
• Public announcement that trade under a mark will cease, coupled with subsequent non-
use, may constitute abandonment if announcement is unequivocal
• Intent not to resume use may be inferred from public announcement of intent to
discontinue use of mark
• EO’s statement that it would continue making AE trucks in the immediate future, but
not forever, was not an unequivocal statement of an intent to abandon mark
• Compare to statement in Hiland Potato Chip Co. v. Culbro Snack Foods, Inc., 585 F.Supp. 17,
22 (S.D. Iowa 1982), where plaintiff was estopped from arguing it had an intent to
resume use of the Kitty Clover mark based on its unequivocal statement that “the Kitty
Clover brand name ‘will be eliminated’” and that “‘All items will be under the Hiland
label.’”
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Wells Fargo & Co. v. ABD Insurance & Financial Services, Inc., 758 F.3d 1069 (9th Cir. 2014)
• Wells Fargo (“WF”) acquired ABD Insurance (“Former ABD”) in
2007
• 2008 WF changed name of Former ABD to “Wells Fargo Insurance
Services” but continued to display Former ABD mark on customer
presentations and solicitations, maintained the Former ABD website
and metatags and accepted payments made to ABD
• When WF failed to renew registration of Former ABD mark,
members of Former ABD launched new insurance and financial
services company using ABD mark (“New ABD”)
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Wells Fargo & Co. v. ABD Insurance & Financial Services, Inc., 758 F.3d 1069 (9th Cir. 2014)
• WF sued for trademark infringement and unfair competition and moved for
preliminary injunction – denied by the district court based on WF’s prospective
intent to abandon the mark given its rebranding and its determination that
WF’s continued uses of ABD were “residual … or in the context of a
historical background” and thus not bona fide and in the ordinary course of
trade Id. at 1072
• Ninth Circuit Court of Appeals reverses and remands
– Prospective intent to abandon not properly considered in evaluating whether
bona fide use of mark in ordinary course of business has ceased
– WF’s continued use of ABD in customer presentations and solicitations
constituted bona fide use in the ordinary course of business
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Specht v. Google Inc., 747 F.3d 929 (7th Cir. 2014)
• Seventh Circuit Court of Appeals affirmed summary judgment for
Google on basis that plaintiffs abandoned mark
• Plaintiff founded Android Data Corporation (“ADC”) in 1998 and in
2002 obtained registration of “Android Data”. ADC licensed e-
commerce software and provided website hosting and design and
computer consulting services
• By 2002, ADC lost clients and stopped major operations; plaintiff
transferred ADC’s assets to another plaintiff-owned company and
spent next year unsuccessfully seeking a buyer; ADC phone line
cancelled; limited business activities, including hosting ADC’s website;
some limited hosting services for others
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Specht v. Google Inc., 747 F.3d 929 (7th Cir. 2014)
• 2005 – plaintiff let ADC’s domain name (androiddata.com) lapse, and
associated emails inactive; unknown number of business cards bearing
mark passed out in 2005
• 2005 – Google acquired Android, Inc. (developer of Android
operating system for smart phones)
• November 2007 – Google releases public beta version of Android
software and continuously used and licensed mark thereafter
• December 2007 – plaintiff sent mass mailing with Android Data mark
to promote software to catalog companies, but no sales; in early 2008
unsuccessful attempt to license software; in 4/09 used mark on
resurrected website
• Google denied registration of “Android” on basis of likelihood of
confusion with plaintiff ’s Android Data registration
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Specht v. Google Inc., 747 F.3d 929 (7th Cir. 2014)
• Intent to resume use in commerce must be formulated within 3 years of non-
use Id. at 934 (citing ITC Ltd. V. Punchgini, Inc., 482 F.3d 135, 149 n.9 (2d Cir.
2007); Imperial Tobacco Ltd., Assignee of Imperial Group PLC v. Philip Morris, Inc.,
899 F.2d 1575, 1581 (Fed. Cir. 1990))
• Use must pertain to sale of goods or provision of services. Id. at 934 (citing 15
U.S.C. § 1127)
• Sporadic attempts to solicit business are not a use in commerce Id. at 935
• Plaintiff ceased use of Android Data mark at end of 2002; none of the
following claimed activities constituted continued use:
– efforts to sell business assets in 2003 and 2004 is different from selling goods/services
under mark and does not constitute use in commerce
– phone service not cancelled until 2003 but no operations in 2003
– operation of website until 2005 insufficient use because no goods/services being offered
or provided
– failed sales efforts in 2007 were isolated and not sustained
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Specht v. Google Inc., 747 F.3d 929 (7th Cir. 2014)
• Once mark abandoned – in public domain and may be appropriated by
others
• Google acquired trademark rights in Android mark in November 2007
• Trademark owner’s resumption of use of an abandoned mark does not
retroactively cure the past abandonment – priority rights are based on
date when use resumed
• Plaintiff ’s resumption of use or intent to resume use by December
2007 was too late because Google became the senior user in
November 2007
• Plaintiff ’s registration was cancelled pursuant to 15 U.S.C. § 1119,
which grants courts the authority to cancel a trademark registration
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Cumulus Media, Inc. v. Clear Channel Communications, Inc., 304 F.3d 1167 (11th Cir. 2002)
• Plaintiff radio station (“CMI”) identified itself as “The Breeze” from
January 1994 until August 2000 by using such mark in radio and t.v.
ads, outdoor signage, business cards and promotional materials (cups,
mugs, stickers, etc.)
• September 2000 CMI announced change in name on air from The
Breeze to Star 98 and made some changes in music programming
• After name change, CMI continued to use The Breeze on outdoor
signage, business cards and promotional merchandise
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Cumulus Media, Inc. v. Clear Channel Communications, Inc., 304 F.3d 1167 (11th Cir. 2002)
• 13 months after CMI’s name change, defendant Clear Channel (“CC”)
changed one of its station’s on-air name from “The Mix” to “The
Breeze” and advertised The Breeze is back and now at a new station
number; played similar programming to the former The Breeze
• CMI filed infringement and unfair competition claims against CC and
moved for preliminary injunction and CC claimed CMI abandoned
The Breeze
• Eleventh Circuit Court of Appeals affirmed preliminary injunction for
plaintiff CMI, finding no abandonment of mark
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Cumulus Media, Inc. v. Clear Channel Communications, Inc., 304 F.3d 1167 (11th Cir. 2002)
• “Because a finding of abandonment works an involuntary forfeiture of
rights, federal courts uniformly agree that defendants asserting an
abandonment defense face a ‘stringent,’ ‘heavy,’ or ‘strict burden of
proof.’” Id. at 1175
• Any prima facie case of abandonment that CC established based on
CMI’s announcement of its name change was rebutted by CMI, which
showed continued use of the mark on business cards, signage and
promotional materials, which went beyond token use
• Ultimate burden to prove abandonment by a preponderance of the
evidence remained with defendant CC, who was found unlikely to
succeed on the merits of the abandonment defense
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Exxon Corp. v. Humble Exploration Co., 695 F.2d 96
(5th Cir. 1983)
• Limited, arranged sales of oil products under the “Humble” mark as
part of Exxon’s trademark program did not constitute “use” sufficient
to avoid a prima facie case of abandonment
• Mark used on isolated products and select invoices sent to selected
customers and no product sales dependent upon mark for
identification of source
• Lanham Act does not allow hoarding of mark by use of a trademark
maintenance program to prevent use of the mark by others
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Silverman v. CBS, Inc., 870 F.2d 40 (2d Cir. 1989)
• CBS found to have abandoned the mark “Amos n Andy” for radio and
television programs based on continued non-use of mark for 21 years
due to complaints by civil rights organizations
• To rebut presumption of abandonment, CBS demonstrated it had:
– Licensed Amos n Andy programs for limited use in connection with
documentary and educational programs
– Challenged infringing uses of mark
– Renewed copyrights in t.v. programs
– Periodically reconsidered whether to resume the radio and t.v. programs
• Court found mark abandoned because even if CBS intended to resume
use of mark at some future point in more accommodating social
climate, CBS did not demonstrate plans to resume use in the
reasonably foreseeable future
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Can Changing Your Mark Result in Abandonment?
Hana Financial, Inc. v. Hana Bank, 735 F.3d 1158
(9th Cir. 2013)
• 1991 defendant Hana Bank (“HB”) adopts name Hana Bank for
banking and financial services
• 1994 HB establishes the Hana Overseas Korean Club (the “Club”) to
provide financial services to Korean Americans in the U.S. and in
connection with such services uses the marks Hana Overseas Korean
Club and Hana Bank (in a combination of English and Korean)
• In 2000, HB changed the Club’s name to “Hana World Center” and in
2002 HB began operating an agency in NY under the Hana Bank mark
• April 1995 plaintiff Hana Financial, Inc. (“HFI”) began using Hana
Financial in connection with factoring and financial services; obtains
federal registration of Hana Financial
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Hana Financial, Inc. v. Hana Bank, 735 F.3d 1158
(9th Cir. 2013)
• 2007 HFI files trademark infringement action against HB claiming its
use of Hana Bank infringes HFI’s Hana Financial mark; HB claims
superior rights in the Hana Bank mark and sought cancellation of
HFI’s registration
• HFI claimed that HB had abandoned the Hana Bank mark based on
its prior name changes
• Court found sufficient evidence to support jury verdict that HB had
priority rights in the Hana Bank mark and had not abandoned such
mark because it had used its mark beginning prior to April 1995 and
continuously since that date on the basis that HB could tack its present
use of Hana Bank to its prior use of Hana Overseas Korean Club and
Hana World Center
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Hana Financial, Inc. v. Hana Bank, 735 F.3d 1158
(9th Cir. 2013)
• Trademark user may “tack” date of first use of earlier mark onto
subsequent mark to establish priority where two marks are so similar
that consumers would regard them as essentially the same
• Standard for tacking is strict – marks must create the same, continuing
commercial impression Id. at 1164
• “Hana” was the most significant portion of the name and “Overseas
Korean Club” and “World Center” did not change buyers’ overall
commercial impression
• “So long as the owner continues use of the “key element” of the
registered mark, courts will generally not find abandonment.” Id. at
1168 (quoting Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947,
955 (7th Cir. 1992))
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6. Abandonment by Acts or Omissions
of the Trademark Owner
Course of conduct of trademark owner, including acts or omissions, that
cause mark to become generic or otherwise lose its significance as a mark
(15 U.S.C. § 1127)
A. Naked Licensing
• Trademark owner may grant a license and remain protected provided
quality control of goods and services sold under the mark by licensee
is maintained. Moore Bus. Forms, Inc. v. Ryu, 960 F.2d 486, 489 (5th Cir.
1992)
• “Uncontrolled or ‘naked’ licensing may result in the trademark ceasing
to function as a symbol of quality and controlled source.” (J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition § 18:48
at 18-126 (4th ed 2016))
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• When licensor fails to exercise adequate quality control over licensee,
court may find trademark owner has abandoned mark and is estopped
from asserting rights to the mark. Barcamerica International USA Trust v.
Tyfield Importers, Inc., 289 F.3d 589, 596 (9th Cir. 2002)
• What constitutes adequate quality control is subject to a flexible
standard – ultimate issue is whether the control exercised by the
licensor is sufficient under the circumstances to satisfy the public’s
expectation of quality assurance arising from the presence of the
trademark on the licensee’s goods or services. Restatement (Third) of
Unfair Competition § 33 cmt. c (1995)
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Barcamerica Int’l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589 (9th Cir. 2002)
• Plaintiff licensor brought trademark infringement action against
competitor for infringement of plaintiff ’s registered Leonardo
DaVinci mark for wines, after defendant had sought cancellation of
plaintiff ’s registration on the basis of abandonment
• Plaintiff licensed its mark for wine and alcoholic beverages pursuant to
agreements which contained no quality control provisions
• Plaintiff ’s quality control over licensee’s wines consisted of a principal
of the plaintiff occasionally, informally tasting the wine and reliance
on the reputation of licensee’s winemaker
• Ninth Circuit Court of Appeals affirmed district court decision that
plaintiff engaged in naked licensing and therefore forfeited its rights in
the mark; registration cancelled
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Barcamerica Int’l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589 (9th Cir. 2002)
• “The lack of an express contract right to inspect and supervise a
licensee’s operations is not conclusive evidence of lack of control.
‘[T]here need not be formal quality control where the particular
circumstances of the licensing agreement [indicate] that the public will
not be deceived.’ … Indeed, ‘[c]ourts have upheld licensing agreements
where the licensor is familiar with and relies upon the licensee’s own
efforts to control quality.’” Id. at 596 (quoting Moore Bus. Forms, Inc.,
960 F.2d at 489; Taco Cabana Int’l, Inc. v. Two Pesos, Inc., 932 F.2d 1113,
1121 (5th Cir. 1991); and Morgan Creek Prods., Inc. v. Capital Cities/ABC,
Inc., 22 U.S.P.Q.2d 1881, 1884 (C.D. Cal. 1991)
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Barcamerica Int’l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589 (9th Cir. 2002)
• Plaintiff ’s random testing and reliance on licensee’s winemaker’s
reputation (which winemaker had died), were not sufficient quality
controls, as plaintiff had no knowledge of licensee’s quality controls
and no close working relationship with the licensee
• Court suggested that plaintiff or its agent should have sampled an
adequate number of bottles of wine on an annual basis in some
organized way to ensure sufficient quality
• Whether product was good or bad was irrelevant – what matters is that
the trademark owner hold the product to its standard of quality, so
that nature of goods sold under the mark is consistent and predictable
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Taco Cabana Int’l v. Two Pesos, Inc., 932 F.2d 1113
(5th Cir. 1991)
• Two brothers operating different restaurants used the same trade dress
in each restaurant under a cross-license agreement
• Prior to the license, brothers operated one of the restaurants together
for 8 years and the restaurants had similar procedures and products –
no naked license found
• Where close working relationship between license parties, may rely on
each party’s intimacy with standards and procedures to ensure
consistent quality, and where no actual decline in quality standards, a
lack of inspection and control formalities is no basis for abandonment
Id. at 1121
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Hokto Kinoko Co. v. Concord Farms, 738 F.3d 1085
(9th Cir. 2013)
• Japanese mushroom grower did not engage in naked licensing by
licensing marks to its U.S. subsidiary
• Although license agreement did not include quality control provisions,
licensor reasonably relied on subsidiary’s efforts to control quality of
goods where there was a close working relationship between licensor
and licensee, they jointly developed the growing conditions and quality
control mechanisms used in the U.S. market and the licensor was
familiar with the subsidiary’s efforts to control the quality of the goods
and monitored the quality control of the subsidiary’s goods
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Eva’s Bridal Ltd. V. Halanick Enterprises, Inc., 639 F.3d
788 (7th Cir. 2011)
• Plaintiff sued former licensee for trademark infringement for
continued use of mark in connection with operation of bridal store
after expiration of license agreement
• Seventh Circuit Court of Appeals affirmed district court’s dismissal of
action on basis that plaintiff abandoned mark by engaging in naked
licensing
• License agreement had no quality control provisions – nothing that
required the licensee to operate the store in a particular way or that
gave the licensor any power of supervision
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Eva’s Bridal Ltd. V. Halanick Enterprises, Inc., 639 F.3d
788 (7th Cir. 2011)
• Licensor never tried to control any aspect of licensee’s shop, and
simply relied on the fact that licensee sold dresses from some of the
same designers as shop carried when first licensed
• Supervision required for a trademark license is the sort that produces
consistent quality; decision making authority over quality must remain
with the trademark owner
Id. at 790-91
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B. Abandonment Through Genericide
• If a trademark is used as the generic name of a product or service, it
ceases to function as a source identifier and results in the
abandonment of the mark. J. Thomas McCarthy, McCarthy on
Trademarks and Unfair competition § 17.8 (4th ed. 2016)
• Generic terms are not protectable because they do not identify the
source of a product or service Park ‘N Fly, Inc. v. Dollar Park & Fly,
Inc., 718 F.2d 327, 329 (9th Cir. 1983), rev’d on other grounds, 469 U.S.
189 (1985)
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Elliott v. Google, Inc., 860 F.3d 1151 (9th Cir. 2017)
• Plaintiff petitioned for cancellation of the GOOGLE trademark on
basis that it was generic, contending that it is primarily understood as a
generic term universally used to describe the act of internet searching.
Plaintiff required to prove genericide by a preponderance of the
evidence
• Ninth Circuit Court of Appeals affirmed summary judgment in favor
of Google, Inc., finding that the GOOGLE mark is not generic
• Genericide occurs when public appropriates trademark and uses it as
generic name for types of goods or service irrespective of source Id.
at 1156
• “trademark becomes generic when ‘primary significance of the
registered mark to the relevant public’ is as the name of a particular
type of good or service irrespective of its source.” Id. at 1156
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Elliott v. Google, Inc., 860 F.3d 1151 (9th Cir. 2017)
• “If the relevant public primarily understands a mark as describing
‘who’ a particular good or service is, or where it comes from, then the
mark is still valid. But if the relevant public primarily understands a
mark as describing ‘what’ the particular good or service is, then the
mark has become generic.” Id. at 1156
• Use of a mark as a verb does not automatically constitute generic use
because “an internet user might use the verb ‘google’ in an
indiscriminate sense, with no particular search engine in mind; or in a
discriminate sense, with the GOOGLE search engine in mind.” Id. at
1158
• Claim of genericide must relate to a particular type of good or service,
and even if the public uses the verb google in a generic and
indiscriminate sense, that indicates nothing about how the public
understands the word with regard to internet search engines. Id. at
1159
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Elliott v. Google, Inc., 860 F.3d 1151 (9th Cir. 2017)
• “Documented examples of generic use might support a claim of
genericide if they reveal a prevailing public consensus regarding the
primary significance of a register mark. … However, if the parties
offer competing examples of both generic and trademark use, this
source of evidence is typically insufficient to prove genericide.” Id. at
1160-61 (citing McCarthy on Trademarks § 12:13). Google’s survey
evidence showed 93% of respondents identified GOOGLE as a brand
name rather than a common name for search engines.
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King-Seeley Thermos Co. v. Aladdin Industries, Inc., 321 F.2d 577 (2nd Cir. 1963)
• Plaintiff ’s “Thermos” mark found to be generic based on widespread
use by the public of thermos as a synonym for vacuum insulated bottle
• Primary significance to the public of the word “thermos” is its
indication of the nature and class of an article rather than as an
indication of its source Id. at 581
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Pilates, Inc. v. Current Concepts, Inc., 120 F.Supp.2d 286 (S.D.N.Y. 2000)
• Mark PILATES for exercise method and associated equipment found to be
generic by clear and convincing evidence
• Generic marks lack protection and are subject to cancellation. Id. at 296
• Evidence considered in determining whether a mark is generic includes: (1)
dictionary definitions; (2) generic use of term by competitors and persons in
the trade; (3) plaintiff ’s own generic use; (4) generic use in the media; (5)
consumer surveys; and (6) whether there are commonly used alternative means
to describe the product or service. Id. at 297
• Primary significance of “pilates” is a method of exercise, not a source of a
product or service, based on (1) dictionary evidence identifying pilates as a
method of exercise; (2) significant third party use of the term by persons in
the industry to describe the method of exercise taught; (3) plaintiff ’s own use
of term in a generic manner; (4) extensive media use of pilates to describe a
method of exercise; and (5)the necessity of using the term pilates to describe
the exercises
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C. Other Acts or Omissions of the Trademark Owner That Could
Lead to Abandonment
(i) Can a trademark holder’s failure to take action against infringers result
in abandonment?
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Sweetheart Plastics, Inc. v. Detroit Forming, Inc., 743
F.2d 1039 (4th Cir. 1984)
• Manufacturer of ice cream dish designs sued competitor for injunctive
relief for false designation of origin and unfair competition arising
out of its sale of similar dish designs
• Defendant claimed plaintiff abandoned rights in dish designs based
on its failure to take action against third parties who plaintiff knew
were manufacturing and selling similar dish designs
• Fourth Circuit Court of Appeals reversed district court (jury verdict)
finding of abandonment
• “Acts of omission” causing a mark to lose its significance as an
indication of origin may include failing to take action against
infringers. Id. at 1047 (citing Wallpaper Mfgs. Ltd. v. Crown Wall Covering
Corp., 680 F.3d 755, 766 (CCPA 1982))
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Sweetheart Plastics, Inc. v. Detroit Forming, Inc., 743
F.2d 1039 (4th Cir. 1984)
• Party may be deemed to have abandoned mark by knowingly
permitting such excessive adverse use of a mark that it has lost all
significance as an indication of source. Id. at 1048
• Typically, failure to prosecute infringers does not amount to
abandonment but is relevant to the strength of the mark – widespread
use of a mark resulting from failure to prosecute infringers weakens a
mark
• Fourth Circuit Court of Appeals found use of similar design by 2
other manufacturers was insufficient to establish abandonment
because plaintiff tendered evidence of remedial actions against them
(cease and desist letters and suit) and such use was not so extensive
that designs lost their significance as an indication of source
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(ii) Assignment of Mark in Gross – Transferring a trademark without the
associated goodwill is an invalid assignment that can result in a loss
of the trademark rights, or the assignee’s failure to acquire any rights.
See Sugar Busters, LLC v. Brennan, 177 F.3d 258, 265 (5th Cir. 1999)
• 15 U.S.C. § 1060(a) – Trademark must be assigned in writing together
with the goodwill of the business in which the mark is used or with
the part of the goodwill of the business connected with the use of
and symbolized by the mark
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7. Recommendations/Practice Tips
A. For Trademark Owners Seeking to Avoid Abandonment:
• Before discontinuing use of a mark, carefully assess the current and
prospective value of the mark. If continued value, explore ways to continue
statutory trademark use of the mark at least on related goods or services to
avoid abandonment
• Don’t make public, unequivocal statements regarding brand discontinuance or
name changes
• If you have to temporarily suspend use of a mark, document and undertake
efforts which demonstrate actual and concrete plans to resume use of the
mark within the reasonably foreseeable future
• If you want to change or modernize your mark without abandoning your
trademark rights, the new mark must retain the distinctive characteristics or key
elements of the old mark such that the new and old forms of the mark create
the same, continuing commercial impression
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• If you want to license your mark, do so pursuant to a written license
agreement which includes quality control provisions, such as quality standards
and inspection and approval rights, and routinely monitor the quality of the
licensed products or services
• To avoid genericide, trademark owners should:
– Use the trademark as an adjective rather than a noun or a verb, and
use the generic name of the goods with the mark (Kleenex tissues
rather than Kleenex; Xerox copier rather than Xerox the documents)
– Present the mark in a distinctive manner, such as stylized lettering or
capitalizing the first letter of the mark
– Use applicable trademark symbol with the mark (®, TM, SM)
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– Run ad campaigns which educate the public to perceive mark as a
source identifier rather than the common name of the product or
service. For example,
“‘Kleenex’ is a brand name … and should always be followed by an
® and the word ‘Tissue.’ [Kleenex® Brand Tissue] Help us keep
our identity, ours.” (Kimberly-Clark Corp.)
“I am stuck on Band-Aids brand cause Band-Aid’s stuck on me.”
(Johnson & Johnson Corp.)
Recent YouTube Video – Don’t Say Velcro – its hook and loop
fasteners. (Velcro Companies)
“Your can’t Xerox a Xerox on a Xerox. But we don’t mind at all if
you copy a copy on a Xerox® copier.” (Xerox Corporation)
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B. For Parties Who Intend to Adopt Marks Held by Others on Basis
of Their Abandonment of Mark:
• Do not assume abandonment on basis of cancellation of trademark
registration, name change, product discontinuance, business closure or
acquisition
• Investigate use by trademark owner – evaluate nature of any
continuing uses of mark and consider length of time mark not in use,
reasons for non-use and potential plans of trademark owner
• If grounds to establish abandonment, search to determine if there has
been any other intervening use of mark by other parties
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Presented by:James R. Hastings
1. Abandonment - TTAB & Public Policy Trends
2. Trademark Abandonment - overview
3. What is excusable non-use?
4. TTAB Petition for Cancellation based on abandonment
5. Practice Tips: Trademark Portfolio Management
(and how to avoid claims of abandonment)
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Are We Running Out of Trademarks?
Harvard Law Review, February 2018
Issues of trademark abandonment may elicit higher scrutiny going forward
➢ Trademark depletion. The process where a decreasing number of trademarks remain unclaimed by any trademark owner.
➢ Trademark congestion. Where an already claimed mark is claimed by an increasing number of different trademark owners.
Result: Business owners have to resort to inferior marks and the trademark system is becoming increasingly noisy and complex
(i.e., litigious)
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Deadwood Registrations
The USPTO has a public policy doctrine that seeks to keep the Registry of Trademarks clear of deadwood [aka. “abandoned”] registrations.
Deadwood registrations include those where the mark is not currently being used:
o on all of the goods and services*;
o some of the goods and services*; or
o was never used on certain of the goods and services at the time the registration issued or anytime thereafter
* with an [objective] intent not to resume use
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Deadwood registrations have been recognized by the U.S. Trademark Trial and Appeal Board as being serious problem.
How serious a problem?
The TTAB recently conducted a recent pilot program that concluded:
“more than half of registrations being maintained include at least
some goods or services for which the registered mark is not being actually used.”
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Impact of “Deadwood” Registrations
USPTO-Examiner’s Refusal. Cited as basis to refuse an applicant’s attempt to register due to a likelihood of confusion with the preexisting registration (section 2d refusal)
TTAB. Invoked in trademark opposition proceedings by Opposers(in support of the Notice of Opposition) and by Applicants (as an affirmative defense of abandonment of common law rights) OR petition for cancellation of the registration based on abandonment
➢ remember: more than half of registrations being maintained contain some form of “deadwood”
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TTAB’s Response (actively under consideration)
➢ Streamlined cancellation proceeding. The TTAB is considering revision of its rules to allow a party to seek an expedient cancellation of registrations for marks no longer in use or that never were in use.
➢ Grounds for cancellation. Under the expedited procedure, the party would be limited to asserting the following grounds: (1) abandonment of one or more goods (plus intent not to resume use); or (2) no use of one or more goods prior to the relevant date of an allegation of use.
➢Counterclaims by the registrant would not be permitted.
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Deadwood Registrations in TTAB Monitoring and Enforcement
A. Characteristics:
➢Generally larger company
➢ Submits motion to extend time to file a notice of opposition
➢Notifies Applicant of trademark owner’s preexisting registration(s) (often “family” of marks) citing numerous goods and services over a wide variety of classes (soft cease and desist letter)
➢ Requests that Applicant withdraw its application (and often seeks promise from Applicant not to use the mark)
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Deadwood Registrations in TTAB Monitoring and Enforcement
B. Results of Strategy
➢ Favorable result often achieved (withdrawal of application or deletion of certain goods by Applicant) when Applicant is a smaller company who does not wish to incur the expense of a trademark opposition litigation
➢ Potentially disastrous result if there is a Counterclaim for trademark abandonment against the trademark owner (potential opposer) based on non-use on all of the goods or some of the goods set forth in its invoked registrations…
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Deadwood Registrations in TTAB Monitoring and Enforcement
“THE BOOMERANG CASE”
➢Aggressive monitoring and enforcement program
➢ Extensions of time to file a notice of opposition filed against numerous third-party applications on a continuous basis
➢ Reliance on multiple registrations to show “strength” of rights
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Trademark Abandonment15 U.S.C. Section 1127
A trademark is deemed to be abandoned when…
➢ its use has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of abandonment.
➢ “Use” of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark.
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Trademark Abandonment (cont.)
What constitutes “use” in the ordinary course of trade?
a. Goods
➢ When the mark is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods…and
➢ The goods are transported or sold in commerce
15 USC Section1127
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Trademark Abandonment (cont.)
What constitutes “use” in the ordinary course of trade?
b. Services
➢ when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.
15 USC Section 1127
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Trademark Abandonment (cont.)
Token use is NOT “use” for purposes of avoiding abandonment.
➢ example: a sale or shipment to yourself or to a business unit.
HOWEVER….
➢ What constitutes use in the "the ordinary course of trade" varies from industry to industry.
examples: seasonal sales and pharmaceuticals (clinical trial use) generally constitute bona fide use and are acceptable
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Practice Tips
Keeping your U.S. trademark registration alive
✓ Be vigilant. To keep a registration alive, the registration owner must file required maintenance documents at regular intervals. Failure to file the required maintenance documents during the specified time periods will result in the cancellation of the U.S. trademark registration or invalidation of the U.S. extension of protection.
✓ Communicate. Create an internal monitoring checklist to discuss with business units to make sure that all goods and services are being used and/or to document any excusable non-use.
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Affidavit of use [or excusable non-use]
Requirements
Section 8 of the Trademark Act applies to registrations resulting from applications under §1 or §44 of the Trademark Act.
(between 5th and 6th year post registration)
Section 9 of the Act applies to renewal of applications.
(between 9th and 10th year post-registration)
Section 71 of the Act, requires periodic affidavits or declarations of use or excusable nonuse in registered extensions of protection of international registrations to the United States.
(between 5th and 6th year post registration)
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Section 8 – Relevant Affidavit Particulars
Affidavit of use or non-use
State that (a) the registered mark is in use on the goods and/or (b) identify classes being deleted from the registration (if affidavit does not cover all goods)
If not in use set forth the date when such use of the mark in commerce stopped and the approximate date when such use is expected to resume; and recite facts to show that nonuse is due to special circumstances that excuse the nonuse and is not due to an intention to abandon the mark; and
Include specimen(s) showing how the mark is in use
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Combined Section 8 and 9
Affidavit of Use and renewal
Filed within the ninth and tenth year post-registration. State that (a) the registered mark is in use on the goods and/or (b) identify classes being deleted from the registration (if affidavit does not cover all goods)
If not in use set forth the date when such use of the mark in commerce stopped and the approximate date when such use is expected to resume; and recite facts to show that nonuse is due to special circumstances that excuse the nonuse and is not due to an intention to abandon the mark; and
Include specimen(s) showing how the mark is in use
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Affidavit of Use or Excusable Non-Use
Section 71 Requirements of Affidavit
Who? Owners of registered extensions of protection to the U.S. (also called §66(a) registrations) who wish to maintain the protection granted their mark in the U.S. pursuant to the Madrid Protocol.
What? Must file an affidavit or declaration of use in commerce or excusable nonuse to avoid cancellation of protection in the U.S
When? Affidavits must be filed between the 5th and 6th anniversary dates of the issuance of the certificate of extension of protection. Further affidavits must be filed within the year before the 10th year anniversary.
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Practice Tips
Common Mistakes to Avoid
✓ Correct Owner. Section 8 and Section 9 documents must be filed by the current owner. If the documents are not filed by the proper owner, the documents may be refused and the registration could be cancelled.
✓ Accuracy. If goods or services currently identified in the registration are not in use, they should be deleted from the registration when you submit your filings. Otherwise, the registration could be challenged because it contains goods and services that are not in use.
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Non-use that is not “excusable” TMEP Section 1604.11
Business Decision. Nonuse related to a business decision is not beyond the TM owner’s control and does not excuse nonuse.
Decreased Demand. Decreased demand for the product sold under the mark, resulting in its discontinuance for an indefinite period, does not excuse nonuse.
Negotiations with Distributors. a statement that samples of the goods have been shipped to potential distributors, may establish lack of intention to abandon the mark, but does not establish the existence of special circumstances that excuse the nonuse
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Case Study No.1:
An ecommerce apparel company has an existing registration of its mark “CLOTHING X” for seven different clothing items in International Class 25. It proceeds to file a Section 8 Affidavit (between the 5th and 6th year post registration) stating that the mark is in use on all of the goods and services set forth in the application.
Query: what if the CLOTHING X mark was not in use on all of the goods and services set forth in the registration at the time of filing of the Section 8 affidavit?
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Case Study No. 2:
A national consumer brand has an existing registration for its “BRAND Z” trademark for over thirty (30) different goods and services in four different classes. It proceeds to file a Section 9 renewal Affidavit (between the 9th and 10th year post registration) stating that the mark is in use on all of the goods and services set forth in the registration certificate.
Query: what if the BRAND Z mark was not in use on all of the goods and services set forth in the registration at the time of filing of the Section 9 renewal affidavit?
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Case Study No. 3:
A German company obtains a registration for its DEUTSCHE GEAR trademark for three types of apparel items in Class 25 pursuant to Section 66(a). It has not yet used the mark in commerce in the United States.
Query: what happens when the owner of the DEUTSCHE GEAR trademark is due to file a statement of use (or non-use) pursuant to Section 71 of the Act and the mark is not yet being used in the U.S.?
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Standard for abandonment
➢ The Trademark Act provides for the cancellation of a registration if the registered mark has been abandoned.
Section 14 of the Trademark Act, 15 U.S.C. § 1064.
➢ a mark is considered abandoned when “its use has been discontinued with intent not to resume such use.”
Section 45 of the Trademark Act, 15 U.S.C. § 1127
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Standard
A mark shall be deemed to be “abandoned” if either of the following occurs: (1) When its use has been discontinued with intent not to resume such use. Intent not to resume may be inferred from circumstances. Nonuse for 3 consecutive years shall be prima facie evidence of abandonment. “Use” of a mark means the bona fide use of such mark made in the ordinary course of trade, and not made merely to reserve a right in a mark.
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Standard
Burden of Proof
Because registrations are presumed valid under the law, the party seeking their cancellation bears the burden of proving a prima facie case of abandonment by a preponderance of the evidence. See On-Line Careline Inc. v. America Online Inc., 229 F.3d 1080, 56 USPQ2d 1471, 1476 (Fed. Cir. 2000). If the petitioner presents a prima facie case of abandonment, the burden of production, i.e., going forward, then shifts to the trademark holder to rebut the prima facie showing with evidence.
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Standard
Petition for Cancellation (procedural elements of claim)
1. Standing. At the pleading stage, all that is required is that a plaintiff allege facts sufficient to show a "real interest" in the proceeding, and a "reasonable basis" for its belief that it would suffer some kind of damage if the mark is registered. The allegations must have a reasonable basis in fact..”
2. Priority. If the Petitioner is asserting that the Registrant’s mark would cause a likelihood of confusion with the Petitioner’s mark, then the Petitioner must establish that its mark had prior rights or use (either through an earlier registration or common law use).
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Standard
Practice Tip – Developing the Case of Abandonment
✓ Pre-filing investigation. Research publicly available websites and other materials that would tend to show [or not] use of the mark by the registrant in the last three years.
✓ Filing. If preliminary investigations point to non-use, a good-faith claim to cancel the mark based on abandonment so long as it is after reasonable investigation.
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Standard
Practice Tip – Discovery
✓ Be specific. If you are the Petitioner, propound discovery that requires the Registrant to show that it has been using the mark on all of the goods or services cited in its registration in the last three years.
✓ Be general. If you are the Registrant, seek to avoid where possible Petitioner’s attempts to get granular with your uses of the goods or services set forth in your registration. Instead, show representative uses for goods in various classes or, alternatively, any other activities that would tend to support an intent not to resume use.
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Practice Tips
✓ Monitor use. Periodically ensure that your client or company is using all of the goods or services set forth in the registration certificate, or will be resuming use in the near future.
✓ Trim the fat. If your client does not have use on all of the goods or services set forth in a registration and has no intention to resume use on at least one of the listed goods, delete the specific good or service from the registration when you go to file Section 8 or 9 Affidavits of continued use.
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RECOMMENDED NEXT STEPS
✓ Review Trademark Portfolio and Uses
✓ Stay ahead of Section 8 and Section 9 deadlines to ensure that you either have evidence of use or an objective intent to resume use
✓ Consider instituting a program to record trademark use evidence on an on-going basis via blockchain technology rights service
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© 2018 James Hastings
James R. [email protected]
James Hastings the author of the online publication, TrademarkOpposition Lawyer, a guide for CEOs and in-house counsel aboutcontested proceedings before the U.S. Trademark Trial and AppealBoard. Mr. Hastings is an approved mediator of the INTA Panel ofMediators, an alternative dispute resolution forum with approximately150 mediators worldwide. James’s insight on trademark law has beensolicited by and featured in Corporate Counsel, Bloomberg BNA, Law.com,and other national legal publications.
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